U.S. Sen Booker Opportunity Zones: Need for Capital in Struggling NJ Communities Like Camden and Newark – Urge Transparency of Investments
With a first round of proposed rules for the new Opportunity Zones tax benefit now publicly available, potential investors, fund managers, community groups and other stakeholders are examining the potential benefits and challenges of this new investment tool.
An article in The New York Times on November 9, 2018, notes that Opportunity Zones could do a lot of good for people living in the zones and earn investors’ money, or simply enrich investors.
Rob Lalka, cofounder and partner at Medora Ventures and Professor at Tulane’s A.B. Freeman School of Business, and Scott Shalett, managing partner and head of public affairs at Medora Ventures, write in The Hill that the private sector and communities must lead on impact reporting in the absence of the government requiring reports on metrics like job creation and poverty reduction.
Lalka and Shalett write that “embedding an impact focus and seeking community input at the outset is far easier and more effective early on, rather than attempting to retroactively measure such non-monetary results or rebuild trust with communities after investments have been made.”
On November 6, 2018, WNYC reported that “Treasury Secretary Steven Mnuchin said he “couldn’t be more excited” about the program, adding that he expects over a $100 billion to be invested.”
“U.S. Senator Cory Booker (D-NJ), who co-sponsored earlier legislation to create Opportunity Zones, described the tax incentive as the “single biggest economic development program we’ve seen in a generation,” citing the need for capital in struggling communities like Camden and Newark in his home state.”
“Nationwide, some of the areas selected as opportunity zones haven’t seen investment in years, but others have. Some include university campuses, military bases, and even a Trump golf club.”
“The selection of the zones was not always well targeted to need or purpose,” said Brett Theodos, principal research associate with the Urban Institute. He analyzed the zones based on the current level of private investment and socioeconomic change.”
The Opportunity Zones could really benefit wealthy New Jerseyans. “The Opportunity Funds can invest in businesses like real estate developments or start-ups. If those investments make a profit and the investor keeps their money in the fund for ten years, those profits will be entirely tax-free.”
“This is where I’ve literally watched people drop their glass, look at me, and go, ‘Are you serious?’” Booker said at an investor event this summer with New Jersey Governor Phil Murphy.
Enterprise Community encourages the submission of comments on the initial set of regulations to the Internal Revenue Services (IRS) by the Friday, December 28, 2018 deadline to identify ways to improve the regulations and prevent abuse of this economic development tool.